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ACCOUNTING QUESTIONS MULTIPLE CHOICE- bonus for quick reply

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1. The issue price of bonds is equal the present value of the principal
the present value of the interest
the present value of the principal minus the present value of the interest
the present value of the principal plus the present value of the interest

2. Which of the following is a characteristic of a liability? (Points: 2)

 

There is an obligation to transfer resources to another entity in the future

The event causing the obligation has already occurred

Yes

Yes

 

 

There is an obligation to transfer resources to another entity in the future

The event causing the obligation has already occurred

Yes

No

 

 

There is an obligation to transfer resources to another entity in the future

The event causing the obligation has already occurred

No

Yes

 

 

There is an obligation to transfer resources to another entity in the future

The event causing the obligation has already occurred

No

No




3. Which of the following situations is NOT consistent with the circumstances of a capital lease?
a company is using a resource for most of its useful life
a company controls the resource as if it had been purchased
a company records a liability equal to the present value of the lease payments
a company records a rental expense every time a lease payment is made


4.

Retained earnings can best be described as


cash receipts minus expenses after adjustments
net income minus expenses after adjustments
undistributed profits
net income minus cash disbursements after adjustments


5.

Debentures have which one of the following characteristics?


they have no specific due date on which they must be repaid
they are more like common stock than like debt
they have no specific collateral backing them up
they are issued by very small firms in an industry


6.

Which of the following sometimes involves an adjustment to the par value of the stock involved?


stock dividend
cash dividend
stock split
purchase of stock as an investment


7.

The effect of a stock dividend is that it


reduces owner's equity
increases the number of outstanding shares
increases retained earnings
reduces liabilities of the corporation
reduces assets of the corporation


8.

Winters Company has announced that it will distribute a 15% common stock dividend on its $10 par value common stock that is currently selling for $75 per share. Upon receiving the new shares, a common stockholder will have increased his/her ownership value by


zero
15% of the par value of shares owned before the stock dividend
15% of the market value of the shares owned before the stock dividend
15% of the difference between par value and market value of the shares owned before the stock dividend


9.

Under what conditions must a contingency be reported as a liability?


it probably will result in a loss and the amount of the loss can be reasonably estimated
it possibly will result in a loss and the amount of the loss can be reasonably estimated
it is remotely possibly it will result in a loss and the amount of the loss can be reasonably estimated
it probably will result in a loss, whether or not the amount of the loss can be reasonably estimated


10.

Identify the correct statement below:


contingencies are always reported in the liability section of the balance sheet
commitments are disclosed on the income statement because they affect net income but not cash flow
capital leases are accounted for as if the leased assets had been purchased
the expense associated with operating leases is reported on the cash flow statement under the category of investing activities


11.

Stock with a higher claim on dividends and assets than common stock is called


Voting stock
Preferred stock
Senior stock
Treasury stock


12.

If a company enters into a capital lease agreement, it will record


an asset only
a liability only
an asset and a liability
an expense only


13.

Which of the following situations is NOT consistent with the circumstances of a capital lease?


a company is using a resource for most of its useful life
a company controls the resource as if it had been purchased
a company records a liability equal to the present value of the lease payments
a company records a rental expense every time a lease payment is made


14.

The direct investment made by stockholders in a corporation is known as


retained earnings
donated capital
contributed capital
charter capital


15.

The term "contributed capital" includes


amounts received in excess of par value
retained earnings
amounts borrowed from banks
authorized but unissued shares


16.

Dividends are a distribution of earnings, not an expense.


True
False


17.

Which of the following should be classified on the balance sheet as short-term (current) liabilities?

That portion of a 5-year
30-year bonds due within one insurance policy to be
year of the balance sheet date consumed in the coming year

(Points: 2)
Yes Yes
Yes No
No Yes
No No

 

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